S&P: Washington City, UT 2016 Bonds Assigned 'AA-' Rating
"The rating reflects, in our opinion, the combination of very strong enterprise and financial risk profiles," said S&P Global Ratings credit analyst John Schulz.
Although very strong enterprise and financial risk profiles map to an indicative rating in our revenue debt criteria matrix of 'aa/aa-', and we have selected the 'aa-' anchor based on the economic risk profile indicative score and financial management assessment (FMA) policies that are not commensurate with a higher rating.
The series 2016 bonds will be used to refund the city's outstanding debt obligations.
Washington City is in Washington County, in southwestern Utah on Interstate 15, about two hours from Las Vegas in the broad and diverse St. George metropolitan area. The city is the second-largest in the county, and its rapid population growth has slowed down in the past four years to an estimated 78,200 from about 50,000 in 2000.
"The stable outlook reflects our expectation that the system will continue to manage expenses and raise rates as needed and produce very strong debt service coverage (DSC) and liquidity as the city progresses through its capital improvement plan (CIP)," added Mr. Schulz. In addition, it will conduct the rate study and update the master plan as specified by management in late 2016 to support the credit at this rating level.
We could raise the rating beyond the outlook period if the city progresses through its CIP and grows liquidity to a level we consider extremely strong, in addition to strengthening its financial policies to make them more commensurate with a higher rating level. Conversely, should growth or the CIP stress liquidity substantially for more than a year, or if the future debt stresses the all-in DSC metric, we could lower the rating.